When methodology meets the data, things get messy. No matter how good the database is you’ll often need to exclude some transactions and adjust others for aspects like sellers financing. You may also need to consider the impact of region or the age of the comparables - and all that is before trying to apply them to a methodology. Join Toby Tatum for this ultra-practical session that takes some of the transaction methods most ambiguous questions and answers them head on. While BIZCOMPS is used for the example, the concepts, insights and tips can be applied to transactions from any data source. It is time to re-approach your market approach!
Program Agenda
The correct terms to describe the valuation method employing BIZCOMPS data
The significance of the initial value indication
The minimum number of comparable transactions to employ in the analysis
The need to identify and exclude unacceptable records
The need to adjust the reported selling prices for comps that include seller financing
Five acceptable ways to develop a value indication from an array of comparable transactions and the three ways you should never use.
The employment of comps from different regions of the country
The employment of comps from past years
The affect the size of a business as determined by its sales revenue has on the analysis
The relationship between the price-to-cash flow and price-to-sales revenue valuation multiples (Tatum’s Law of Market Multiples)
Learning Objectives
Identify and exclude unacceptable records
Recall acceptable ways to develop a value indication
Understand the impact of business size on your analysis
Review factors to consider when selecting comparables
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